Economic surplus measures the value of a decision's:
A)total costs minus its net benefits.
B)total benefits minus its total costs.
C)total costs minus its benefits minus gains from exploitation.
D)benefits minus its costs plus externalities.

Question

Quizplus · Accepted Answer

Economic surplus measures the total benefit minus total cost of a decision. It is a way to determine whether a decision or policy is economically efficient, as it measures the net gain or loss that results from it. Option A is incorrect because it subtracts net benefits, which should be included in the calculation. Option C is incorrect because it subtracts gains from exploitation, which is not a relevant factor in determining economic surplus. Option D is incorrect because it includes externalities, which are not always accounted for in economic surplus calculations.

Economic Surplus Measures the Value of a Decision's